Company Quick10K Filing
Quick10K
Free Flow
10-Q 2019-06-30 Quarter: 2019-06-30
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
8-K 2018-06-12 Enter Agreement, Officers, Exhibits
GWRE Guidewire Software 8,410
WWE World Wrestling Entertainmentinc 6,550
FIBK First Interstate Bancsystem 2,700
LOGC Longwen Group 317
OPBK OP Bancorp 163
AMPE Ampio Pharmaceuticals 62
MKGI Monaker Group 36
ICNN Incoming 0
AUSI Aura Systems 0
MEEC Midwest Energy Emissions 0
FFLO 2019-06-30
Item 1. Financial Statements
Note 1 - Basis of Presentation
Note 2 Going Concern
Note 3 - Incorporation of Subsidiary
Note 4 - Related Party
Note 5 - Capital Stock
Note 6 - Subsequent Events
Item 2. Management's Discussion and Alalyis or Plan of Operation
Item 3. Quantitative and Qualitative Disclosures Abut Market Risks
Item 4. Controls and Proceures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factor
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosure
Item 5. Other Information
Item 6. Exhibits
EX-31.1 ex31-1.htm
EX-31.2 ex31-2.htm
EX-32.1 ex32-1.htm
EX-32.2 ex32-2.htm

Free Flow Earnings 2019-06-30

FFLO 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 g8733.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 

 
 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2019
  
Commission file number 000-54868

 
Free Flow Inc.
(Exact name of registrant as specified in its charter)

Delaware
45-3838831
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
   
6269 Caledon Road, King George, VA
22485
(Address of principal executive offices)
(Zip Code)

(703) 789-3344
(Registrant’s telephone number, including area code)


(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
 
Trading Symbol(s)
 
Name of exchange on which registered
 
 
 
 
 
Common
 
FFLO
 
OTC

Indicate by check mark whether the registrant (1) has fled all reports required to be fled by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to f le such reports), and (2) has been subject to such fling requirements for the past 90 days. Yes   No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes   No

Indicate by check mark whether the registrant is a large accelerated fler, an accelerated fler, a non-accelerated fler, a smaller reporting company, or an emerging growth company. See the defnitions of “large accelerated f ler,” “accelerated fler,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer 
 
Accelerated filer 
Non-Accelerated filer
Smaller reporting company
Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has fled all documents and reports required to be fled by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confrmed by a court. Yes No

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. 26,221,000 shares as of July 26, 2018.


TABLE OF CONTENTS
 
 
Page
PART I - FINANCIAL INFORMATION
 
   
Item 1. Financial Statements (Unaudited)
3
   
Item 2. Management's Discussion and Analysis or Plan of Operations
10
   
Item 3. Quantitative and Qualitative  Disclosures About Market Risks
11
   
Item 4. Controls and Procedures
11
   
PART II - OTHER INFORMATION
 
   
Item 1. Legal Proceedings
11
   
Item 1A. Risk Factor
11
   
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
11
   
Item 3. Defaults Upon Senior Securities
11
   
Item 4. Mine Safety Disclosures
12
   
Item 5. Other Information
12
   
Item 6. Exhibits
12
 
2

ITEM 1. FINANCIAL STATEMENTS

Free Flow, Inc.
Balance Sheet


   
As of
   
As of
 
    June 30, 2019
    December 31, 2018
 
    
(Un-audited)
   
(Audited)
 
ASSETS
           
             
Current Assets
           
Cash
 
$
46,908
   
$
19,115
 
Trade Receivables - current
   
8,629
     
7,723
 
Trade Receivables - old
   
-
     
573
 
Receivable from Subsidiaries
   
2,123
         
Product Development  Advance
   
14,370
         
Advances for Inventory Purchases
   
28,879
     
18,963
 
Inventory at cost,
   
682,361
     
571,260
 
TOTAL CURRENT ASSETS
   
783,269
     
617,634
 
                 
Fixed Assets
               
Land and Building, at cost
   
775,515
     
772,513
 
Less: Accumulated depreciaton
   
(30,901
)
   
(30,901
)
Writtendown value
   
744,614
     
741,612
 
TOTAL FIXED ASSETS
   
744,614
     
741,612
 
                 
Other Assets
               
Delivery Turcks at cost
   
3,500
     
3,500
 
Less: Accumulated depreciaton
   
(2,492
)
   
(2,492
)
Writtendown value
   
1,008
     
1,008
 
Equipment and Delivery Trucks, after depreciation allowance
   
35,000
     
35,000
 
Less: Accumulated depreciaton
   
(7,000
)
   
(7,000
)
Writtendown value
   
28,000
     
28,000
 
TOTAL OTHER ASSETS
   
29,008
     
29,008
 
                 
TOTAL ASSETS
 
$
1,556,891
   
$
1,388,254
 
                 
LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
               
                 
Current Liabilities
               
Accounts Payable
 
$
8,723
   
$
7,468
 
Notes Payable - Related Parties
   
10,018
     
380
 
TOTAL CURRENT LIABILITIES
   
18,741
     
7,848
 
                 
Long Term Liabilities
               
Line of Credit
   
251,000
      -
 
Loan - secured
   
895,877
     
900,100
 
TOTAL LONG TERM LIABILITIES
   
1,146,877
     
900,100
 
                 
Total Liabilities
   
1,165,618
     
907,948
 
                 
Redeemable Preferred Stock
               
Series B; 500,000 shares authorized; 330,000 and 0 issued and outstanding
               
as of December 31, 2018 and 2017 respectively ( Classified as Mezzanine Equity)
   
330,000
     
330,000
 
Series C; 500,000 shares authorized; 470,935 and 0 issued and outstanding
               
as of December 31, 2018 and 2017 respectively ( Classified as Mezzanine Equity) -
               
as equity in Accurate Auto Parts, Inc.
   
470,935
     
470,935
 
Stockholders' Equity (Deficit)
               
Preferred Stock ($0.0001) par value, 20,000,000 shares authorized
               
10,000 shares par value $0.0001 Class A issued on December 31, 2015
   
1
     
1
 
Common stock, ($0.0001) par value, 100,000,000 shares authorized
               
26,200,000 shares issued and outstanding as of December 31, 2018 and December 31, 2017
   
2,622
     
2,620
 
Additional Paid in capital
   
129,033
     
114,546
 
Stockholder's equity in Accurate Auto Parts, Inc.
   
200
         
Subscription not yet accepted
   
2,000
         
Profit (Loss) Current Period
   
(105,522
)
       
Retained Earnings  (Deficit)
   
(437,996
)
   
(437,796
)
TOTAL STOCKHOLDERS' DEFICIT
   
(409,662
)
   
(320,629
)
                 
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
 
$
1,556,891
   
$
1,388,254
 


The accompanying notes are an integral part of these financial statements

3

Free Flow, Inc.
Condensed Statements of Operations
(Unaudited)


   
Six months ended June 30,
   
Three months ended June 30,
 
   
2019
   
2018
   
2019
   
2018
 
                         
REVENUES
                       
Revenues
 
$
147,569
   
$
79,600
   
$
58,784
   
$
39,795
 
TOTAL REVENUES
 
147,569
   
79,600
   
58,784
   
39,795
 
COST OF GOODS SOLD
   
69,283
     
27,277
     
24,772
     
14,521
 
GROSS PROFIT
 
78,286
   
52,323
   
34,012
   
25,274
 
                                 
GENERAL & ADMINISTRATIVE EXPENSES
                               
Administrative expenses
   
103,750
     
13,631
     
41,186
     
8,440
 
Professional fees
   
25,363
     
6,658
     
2,865
     
3,145
 
Selling expenses
   
15,263
     
9,055
     
6,812
     
4,887
 
Financial Expenses
   
39,432
     
1,279
     
17,554
     
987
 
TOTAL GENERAL & ADMISINSTRATEVIE EXPENSES
 
183,808
   
30,623
   
68,418
   
17,459
 
                                 
PROFIT (LOSS) FROM OPERATION
 
(105,522
)
 
21,701
   
(34,405
)
 
7,815
 
                                 
NET INCOME (LOSS)
 
$
(105,522
)
 
$
21,701
   
$
(34,405
)
 
$
7,815
 
                                 
BASIC EARNING PER SHARE
   
(0.0040
)
   
0.0008
     
0.0100
     
0.0003
 
                                 
WEIGHTED AVERAGE NUMBERO OF COMMON SHARESS OUTSTANDING
   
26,221,000
     
26,200,000
     
26,200,000
     
26,200,000
 




The accompanying notes are an integral part of these financial statements

4

Free Flow, Inc.
Statement of  Changes in Shareholders' (Deficit)


                           
Additional
             
   
Common Stock
   
Preferred Stock
   
Paid-in
   
Accumulated
       
   
Shares
   
Amount
   
Shares
   
Amount
   
Capital
   
Deficit
   
Total
 
               
Series-A
                         
                                           
Balance, January 1, 2019
   
26,200,000
   
$
2,620
     
10,000
    $
1
   
$
114,545
   
$
(437,796
)
 
$
(437,796
)
                                                         
Loss for the six months ended
                                                       
June 30, 2019
   
21,000
   
2
     
           
14,448
   
(105,522
)
 
(105,522
)
                                                         
BALANCE, JUNE 30, 2019
   
26,221,000
   
$
2,622
     
10,000
    $
1
   
$
128,993
   
$
(543,318
)
 
$
(543,318
)




The accompanying notes are an integral part of these financial statements

5

Free Flow, Inc.
Statements of Cash Flow


     
Six months
   
Six months
 
     
Ended
   
Ended
 
   
June 30, 2019
   
June 30, 2018
 
                 
CASH FLOW FROM OPERATING ACTIVITIES
 
$
(105,522
)
 
$
21,700
 
(Increase) in Other Assets -
               
(Increase) Decrease in Prepaid Expenses
    -
     
(8,264
)
Increase (Decrease)  in Customer Deposits
    -
     
17,692
 
(Increase) Advance for Inventory Purchases
   
(24,286
)
       
Increase (Decrease)  in Accounts Payable
           
(21,140
)
(Increase) Trade Receivables
   
(333
)
   
(4,710
)
(Increase) Decrease in Inventory
   
(111,101
)
   
(64,963
)
NET CASH USED IN OPERATING ACTIVITIES
   
(241,242
)
   
(59,685
)
                 
CASH FLOW FROM FINANCING ACTIVITIES
               
Proceeds from notes payable - related parties
 
7,515
   
(83,931
)
Increse (decrease) in Prepaid for Asset Purchse
           
25,000
 
Proceeds from Subscription not yet accepted
   
2,000
      -
 
Proceeds form Loan from River Valley Bank
   
246,777
      -
 
(Increase) in Fixed Assets - Land, Building
   
(3,002
)
    -
 
Proceeds from sale of shares
   
14,490
      -
 
Proceeds from Accounts Payable - trade (Decrease in Accounts Payable)
   
1,255
      -
 
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
   
269,035
     
(58,931
)
                 
NET INCREASE (DECREASE) IN CASH
   
27,793
     
(754
)
                 
CASH AT BEGINNING PERIOD
   
19,115
     
5,354
 
                 
CASH AT END PERIOD
 
$
46,908
   
$
4,600
 


The accompanying notes are an integral part of these financial statements

6

Free Flow, Inc.
Notes to Condensed Consolidated Financial Statements
June 30, 2019
(Unaudited)


NOTE 1 – BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of June 30, 2019 and the results of operations and cash flows for the periods presented. The results of operations for the six months ended June 30, 2019 are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC on April 29, 2019.

NOTE 2 GOING CONCERN

The Company’s financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has established itself as a stable ongoing business entity with established revenues and / or sufficient reserves to cover its operating costs and allow it to continue as a going concern. However, the ability of the Company to continue as a going concern is also dependent on the Company obtaining adequate Sales so that the Company can liquidate its inventories and continue as a going business.

In order to continue as a going concern, the Company will need, among other things, Sales of its product lines. Management has obtained such sales through Internet sales and marketing companies who specialize in promotion of such businesses. Management has obtained working capital line of credit from its commercial bank to meet its minimal operating expense and is expecting that cash flow from sales will soon be available to augment the operating capital needs. However, management cannot provide an assurance that the Company will be successful in accomplishing any of its plans.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually fulfill the secured purchase orders to attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

NOTE 3 – INCORPORATION OF SUBSIDIARY

In February 2015, the company incorporated a subsidiary, Promedaff, Inc. and purchased a skin care product line and formulations for $2,000,000 against a promissory note. An e commerce platform was set up for sales and marketing. The efforts did not bear any success and the entire inventory was sold through the Seller and the Promissory Note was cancelled and marked “VOID”. The name of this entity was changed to Motors & Metals, Inc. and had remained inactive but was in good standing, until it received a letter of intent from an overseas buyer willing to enter a long term contract to purchase shredded steal derived from automobile scrap. Thus Motors & Metals, Inc. has embarked upon substituting its automobile crushing business to shredding of automobiles and recovering ferrous metals.

Proposals form renowned manufacturers of auto shredding equipment have been received and are being evaluated to determine the most suitable and competitive supplier. The initial plan is laid out to have an output of 3,000 tons of shredded steel per month.

7


As was reported in 10-Qs for the earlier quarters as well as in 10-Ks for the Annual reports, on February 4, 2016 the company incorporated another subsidiary in the State of Virginia under the name JK Sales, Corp. (on December 7, 2017 the name was changed to Accurate Auto Parts, Inc.) and has since remained in the business of buying end of life and salvage vehicles and selling auto parts.

On April 17, 2018 the company incorporated in Virginia, another subsidiary named Accurate Investments, Inc. with the objectives of acquiring real estate property, and has remained dormant until any business is transacted.

NOTE 4 – RELATED PARTY

As of December 31, 2018, the Company had a note payable in the amount of $380 to Redfield Holdings, Ltd. a related party. During the six months ended the Company borrowed an additional $9,638 thus owing a total sum of $10,018 as of June 30, 2019. The note is unsecured and does not bear any interest and has a maturity date of December 30, 2020.

 NOTE 5 – CAPITAL STOCK

The Company has authorized 100,000,000 shares of common shares with a par value of $0.0001 per shares and 20,000,000 shares of preferred stock, with a par value of $0.0001 per shares.

Pursuant to the resolution of the shareholders meeting held on March 30, 2015 the Company designated 500,000 shares of the preferred authorized shares as preferred shares – Series “B” shares. The preferred shares – Series “B” were assigned the following preferences:

a)
Each share to carry one vote.
b)
Each share will be redeemable with a 365 days written notice to the company.
c)
Each share will be junior to any debt incurred by the Company.
d)
The redemption value will be the par value at which such “preferred shares – series B” are bought by the subscriber.
e)
Each share will carry a dividend right at par with the common shares.

On December 31, 2014 the Company had a Note outstanding in the principal amount of $330,000 plus interest payable to GS Pharmaceuticals, Inc. By mutual consent this note and accrued interest was converted to 330,000 preferred shares – Series “B”.

On March 31, 2015 an amount of $58,000 was subscribed by Redfield Holdings, Ltd. by cancellation of a Note against the issuance of 9,700 shares of preferred shares – Series “A”. These shares were issued to Redfield Holding, Ltd. thus making a total of entire designated preferred shares – Series “A” shares to Redfield Holdings, Ltd. Each share of preferred shares – Series “A” carries voting right equal to 10,000 common shares.

On June 30, 2017 total preferred shares issued and outstanding are 10,000 Series “A” and 330,000 Series “B”.

On April 2, 2019, in a private transaction the Company accepted a sum of $14,490.00 against issuance of 21,000 restricted Common shares of the Company. Thus the total common shares issued and outstanding as on June 30, 2019 stood at 26,221,000.

NOTE 6 – SUBSEQUENT EVENTS

None.

8

ITEM 2. MANAGEMENT’S DISCUSSION AND ALALYIS OR PLAN OF OPERATION

THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH OUR UNAUDITED FINANCIAL STATEMENT SAND NOTES THERETO INCLUDED HEREIN. IN CONNECTION WITH, AND BECAUSE WE DESIRE TO TAKE ADVANTAGE OF, THE “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995, WE CAUTION READERS REGARDING CERTAIN FORWARD LOOKING STATEMENTS IN THE FLOWING DISCUSSION AND ELSEWHERE IN THE THIS REPORT AND IN ANY OTHER STATEMENT MADE BY, OR AN BEHALF, WHETHER OR NOT IN FUTURE FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, FORWARD-LOOKING STATEMENTS ARE STATEMENT NOT BASED ON HISTORICAL INFORMATION AND WHICH RELATE TO FUTURE OPERATIONS, STRATEGIES, FINANCIAL RESULTS OR OTHER DEVELOPMENTS. FORWARD-LOOKING STATEMENTS ARE NECESSARILY BASED UPON ESTIMATES AND ASSUMPTIONS THAT ARE INHERENTLY SUBJECT TO SIGNIFICANT BUSINESS, ECONOMIC AND COMPETITIVE UNCERTAINTIES, MANY OF WHICH ARE BEYOND OUR CONTROL AND MANY OF WHICH, WITH RESPECT TO FUTURE BUSINESS DECISIONS, ARE SUBJECT TO CHANGE, THESE UNCERTAINTIES AND CONTINGENCIES CAN AFFECT ACTUAL RESULTS AND COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FORM THOSE EXPRESSED IN ANY FORWARD-LOOKING STATEMENTS AND COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN ANY FORWARD LOOKING STATEMENTS MADE BY, OR ON OUR BEHALF, WE DIS TO UPDATE FORWARD-LOOKING STATEMENTS.

PLAN OF OPERATION

Accurate Auto Parts, Inc. the Company’s used auto parts subsidiary has made a sale of $79,600 of Automobile Parts and Services. The Company continues seeking additional sales both in the domestic and international markets.

RESULTS OF OPERATIONS

The Company did recognize revenue for a sum of $147,569 during the six months ended June 30, 2019 and $79,600 of revenues during the six month ended June 30, 201. While the net revenues for the period ended June 30, 2019 were higher by $ $67,969 than for the same period during 2018 and the Cost of Goods Sold was higher by $42,007 during the period ended June 30, 2019 as compared to the same period during 2018. This 12.68% increase in cost of goods sold was due to additional labor having been deployed and the training expenses associated thereagainst. The general and administrative expenses for the period ended June 30 2019 were $103,750 as compared to $13,631 for the same period during 2018. During the period of 2018 the Company was at a pause mode (not making any purchases) because of being uncertain if the bank which repossessed the premises (due to landlord having filed a bankruptcy) will sell the property to the Company and enable the Company to continue its business. There were only two employees during the period in 2018 who kept the business open. The level the company has attained at present in its administrative costs could be classified stable and can handle a sales of up to $1,500,000 per annum without any additional administrative expenses.  Likewise the professional and financial expense can be classified as fixed expenses and will not require any significant increase to sustain a $1,000,000 sales.

During the six months ended June 30, 2019 the company recognized a gross profit of $78,286 as compared to $52,323 for the corresponding period in the year 2018, this decrease of $25,963 in Gross profit equates to approximately 13 % as compared to the six months ended June 2018.

During the six month ended June 30, 2019 the company recognized a net operating loss of $105,522 as compared to a profit of $21,701 for the corresponding period in the year 2018, this decrease in net operating profit by $127,223 is due to the fact that the fixed administrative, professional and financial expenses were either being incurred at a minimum level or did not exist. As explained in the foregoing paragraph, the Company in a pause mode.

While the books show an operating net loss of $105,522 the Company has increased its inventory at by $111,101 thus showing a total inventory at cost of $682,361 as on June 30, 2019 as compared to an inventory at cost for a sum of $571,260 as on December 31, 2018. While the Company cannot predict if this inventory will be sold at the list price which approximately is three (3) times its book value cost price (it has been calculated at less than 30% of the selling price) but the management is confident that the marked list price of the inventory is realistic with the current market conditions. The cost of sales is approximately 53% of the sales, thereby leaving an approximately 23% of the list selling price as a hidden value which equates to a minimum of approximately over $500,000.*

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The Company began selling on eBay and has now attained a rating of five star (5/5). This excellent rating is based on review by the customers. Uploading the inventory is a lengthy and slow process (to log on inventory with photographs and price) on the eBay platform. This is being conducted and thus far approximately 9,300 parts are active on eBay and another 4,000 items are backlogged. The total number of parts targeted to be uploaded are approximately 15,000.

Management has opted to provide for the depreciation of equipment, trucks and building at the end of the year instead of providing for it on quarterly basis.

*Market conditions may change, which my adversely affect the future results.

LIQUIDITY

THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM’S REPORT ON THE COMPANY’S FINANCIAL STATEMENTS AS OF DECEMBER 31, 2018, AND FOR EACH OF THE PRECEDING YEARS THEN ENDED, INCLUDES A “GOING CONCERN” EXPLANATORY PARAGRAPH THAT DESCRIBES SUBSTANTIALLY DOUBT ABOUT THE COMPANY’S ABILITY TO CONTINUE AS A GOING CONCERN.

BALANCE SHEET

On June 30, 2018 the Company had total current assets of $1,388,254 consisting of $19,115 in cash and $7,723 in trade receivables, and $573 in Advances for Purchases and $571,260 in inventory and $18,963 in Advance for purchases. As on June 30, 2019 the Company has a total current assets of $1,556,891 consisting of $46,908 in cash and $8,629 in trade receivables, and $28,879 in Advance for purchases, $14,370 in Advance for product development, $2,123 receivable from subsidiaries and $682,361 in inventory at cost.

The Company increased its Equity Capital by accepting a subscription for a sum of $14,490 against sale of 21,000 restricted shares of common stock thus the issued and outstanding number of shares stood at 26,221,000 as on June 30, 2018 as against 25,200,000 issued and outstanding shares as on December 30, 2018.

EQUITY LINE OF CREDIT

The Company has obtained an equity line of credit from River Valley Bank, additionally personally guaranteed by the CEO, Mr. Sabir Saleem against which, a sum of $251,000 was drawn as on June 30, 2018. The line of credit is being used for operating expenses, primarily for purchase of inventory.

REVENUE RECOGNITION

The Company recognizes revenues on arrangements in accordance with Securitas and Exchange Commission Staff Accounting Bulletin Topic 13, REVENUE RECOGNITION and FASB ASC 605-15-25, REVENUE RECONGNITION. In all cases, revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed and collectability is reasonable assured. The Company reported gross revenues of $249,655 for the year ending December 31, 2018.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABUT MARKET RISKS

Not Applicable.

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ITEM 4. CONTROLS AND PROCEURES

Management's Report on Disclosure Controls and Procedures

Management is responsible for establishing and maintaining adequate internal control so as to

(1)  maintain the records  in reasonable detail, which will accurately and fairly reflect the transactions and dispositions of the Company's assets;

(2) to provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that the Company's receipts and expenditures are  made  within the delegated authority ; and

(3) to provide reasonable assurance for the  prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on company’s financial statements.

However, the management asserts that the company does not have any accounting staff due to limited financial resources though has plans to recruit gradually.  Also, this company does not have a well written document on accounting policies and procedures, though has plans to have them shortly.  Consequently, this can result in possible errors in the presentation and disclosure of financial information in our annual, quarterly, and other filings.

The SIC Code of 1700 as showing in Edgar for this company is no longer valid, since this company is now dealing with the auto parts, as OEM Recycled Auto Parts. Segregation of duties is an important factor in Internal Control.  Though it is achieved to a certain extent, the management is committed to strengthen the internal controls effectively in the coming months.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal controls over financial reporting that occurred during the period ended June 30, 2019, that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTOR

Not Applicable to Smaller Reporting Companies.

ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the period of January 1, 2015 and March 31, 2015, the Company issued 9,700 shares of Preferred Shares – Series “A” for a sum of $58,000 and 330,000 shares of Preferred Shares – Series “B” for a sum of $330,000 which were the result of conversion of certain debts of the company.

In April 2019 the Company, as a private transaction, issued 21,000 restricted shares of Common Shares for a sum of $14,490.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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ITEM 4. MINE SAFETY DISCLOSURE

Not Applicable

ITEM 5. OTHER INFORMATION

Not Applicable
 
ITEM 6. EXHIBITS

The following exhibits are included with this quarterly filing.  Those marked with an asterisk and required to be filed hereunder, are incorporated by reference and can be found in their entirety in our original Registration Statement on Form S-1, filed under SEC File Number 000-54868, at the SEC website at www.sec.gov:
 
Exhibit No.
 
Description
     
3.1
 
Articles of Incorporation*
3.2
 
Bylaws*
31.1
 
Sec. 302 Certification of Principal Executive Officer
31.2
 
Sec. 302 Certification of Principal Financial Officer
32.1
 
Sec. 906 Certification of Principal Executive Officer
32.2
 
Sec. 906 Certification of Principal Financial Officer
101
 
Interactive data files pursuant to Rule 405 of Regulation S-T

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 
Free Flow Inc.
 
Registrant
   
   
Dated August 7, 2019
By: /s/ Sabir Saleem
 
 
Sabir Saleem, Chief Executive Officer,
 
Chief Financial and Accounting Officer

 

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